Recent US sanctions threats targeting financial firms conducting business with Russia have sent shockwaves through Turkish-Russian trade, resulting in disruptions and payment delays for imported oil and Turkish exports, as per Reuters reports.

The executive order issued by the US in December, while not directly aimed at the energy sector, has complicated payment processes for Turkish imports of Russian crude oil and Russian payments for various Turkish exports, according to insider sources.

The primary objective of the US sanctions is to curb Kremlin revenue in order to hinder its aggression in Ukraine, while also aiming to avoid significant disruptions to global Russian oil flows, particularly to prevent a spike in gasoline prices—a politically sensitive issue with President Joe Biden seeking re-election later this year.

Although the sanctions haven’t severely interrupted crude supplies from Russia to Turkey, they have caused some payment delays and prompted Turkish banks dealing with Russian clients to tighten compliance measures.

Consequently, this has led to disruptions in payments, impacting both sides of the trade.

Despite geopolitical tensions, notably concerning Russia’s invasion of Ukraine, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan have endeavored to maintain close ties.

However, the recent US sanctions have underscored the delicate balance Ankara must navigate between its relations with Moscow and its alliance with the West.

The disruptions in Russian-Turkish payments commenced following the signing of the executive order by President Biden on December 22nd, which threatened firms aiding Russia in circumventing sanctions with the risk of losing access to the US financial system. Turkish banks, facing heightened scrutiny and pressure, have implemented more stringent compliance measures, resulting in transaction delays and uncertainties.

The Turkish banking sector, under pressure from the US, has been meticulously scrutinising transactions to ensure compliance with sanctions regulations.

Initial trade data reveals a significant decline of 39% year-on-year in Turkish exports to Russia in January, while imports from Russia also fell by 20.2% during the same period.

This downturn in trade activity underscores the immediate impact of the sanctions threat.

Although crude oil imports from Russia saw a substantial increase in previous years, the broader trade disruption has affected various sectors beyond energy, with machinery exports particularly impacted due to concerns about their potential military applications.

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